NEW DELHI: In order to help the government meet its disinvestment target of Rs 30,000 crore next fiscal, the Department of Public Enterprises has asked listed state- owned companies to gear up for buyback of their shares.

"Central Public Sector Enterprises (CPSEs) will amend their Article of Association to provide for buyback of shares, if such provision does not exist in their Articles," the DPE's communication to secretaries of different ministries said.

The Articles of Association relates to conduct of business and affairs of the company.

The DPE guidelines further said that "if a CPSE decides to buyback its own shares from the shareholders using surplus cash, Department of Disinvestment (DoD) on behalf of major shareholders may tender/offer equity on behalf of government".

Listed CPSEs, the DPE note said, are not exercising the option to buyback their shares as private companies do.

Private companies resort to buyback for sustained investor interest in the company and protect their capitalisation in the long term interest of the firms to raise funds from the market.

In order to provide a level playing field to CPSEs vis-a-vis private companies, the DPE said, "all the administrative ministries are advised to instruct CPSEs under their administrative control to take necessary steps to implement the guidelines...".

The ministries have also been asked to file a compliance report on implementation on the guidelines to the DPE.

Under the buyback, the share capital of company is reduced as the re-purchased stocks are extinguished. It helps in providing better returns to shareholders.

In Budget speech, Finance Minister Pranab Mukherjee had said the CPSEs are being given a level playing field vis-a-vis the private sector with regard to practices like buy-backs and listing at stock exchange.

The government is targetting Rs 30,000 crore from stake sales in public sector undertakings in 2012-13, even as it missed the target for the current fiscal by a wide margin.

The government could manage to raise only Rs 14,000 crore in the current fiscal through stake sale in CPSEs, against the budgeted Rs 40,000 crore, due to various global and domestic factors.